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Merck Settles Drug-Pricing Cases

The pharma giant will pay more than $649 million to resolve two cases.
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Merck (MRK) - Get Merck & Co., Inc. (MRK) Report agreed to pay at least $649 million to settle two cases tied to Medicaid drug pricing and alleged sales kickbacks for certain drugs.

The first case calls for Merck to pay $250 million, plus interest, to settle litigation pending in the Eastern District of Louisiana. The second case was pending in the Eastern District of Pennsylvania and resulted in a $399 million settlement.

Merck had already recorded a fourth-quarter charge of $670 million to cover the matters.

The settlements relate to claims that Merck didn't properly report to Medicaid the pricing of its drugs Vioxx and Zocor. According to the U.S. Department of Justice, Merck offered deep discounts to hospitals that favored the two drugs while failing to pay proper rebates to Medicaid.

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Medicaid rules require drugmakers to report their lowest prices to the government to ensure that the Medicaid program also gets such benefits.

The Louisiana suit alleged that Merck offered kickbacks to hospitals promoting its Pepcid heartburn drug and provided substantially reduced prices for the drug.

Merck said the settlements do not constitute an admission of any liability or wrongdoing.

This article was written by a staff member of TheStreet.com.